Despite the Fair Housing Act of 1968 and other federal laws, a large race gap in homeownership continues to exist across the United States. The Black homeownership rate in the fourth quarter of 2022 stood at 44.9%, compared with 74.5% for non-Hispanic whites, according to the U.S. Census Bureau.
The Black-white race gap in homeownership rates widened as the Federal Reserve attempted to bring inflation under control — going from 29.3 percentage points in the first quarter of 2022 to 29.6 percentage points in Q4. Average mortgage interest rates generally increased in 2022 after the Fed implemented a series of rate hikes.
These racial disparities are not new. Historical records confirm a large race gap in homeownership rates has existed since the abolition of slavery. Below we further examine the race gap in homeownership and identify possible solutions.
History of Racial Housing Disparities
The United States has a long history of systemic racism that presents itself in a number of ways, including housing disparities. In January 2022, the National Community Reinvestment Coalition released its home mortgage report examining racial disparities in homeownership from 1900 to 2020.
The NCRC found the gap in homeownership rates between Black and white families reached its lowest level of 23 percentage points in 1980 and its highest level of 30 percentage points in 2015.
In the fourth quarter of 2021, the Black-white race gap in homeownership rates exceeded 31 percentage points. This gap narrowed to 29.6 percentage points in the fourth quarter of 2022, according to data released by the U.S. Census Bureau.
The homeownership rate as of Q4 2022 stood at 74.5% for non-Hispanic white households; 61.9% for Asian, Native Hawaiian, and Pacific Islander families; 48.5% for Hispanic families of any race; and 44.9% among Black households, according to the Census data.
A number of factors have contributed to the race gap in homeownership, including the legacy of race-based discrimination in the housing market.
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Lasting Effects of Redlining
Redlining, the discriminatory practice of denying home loans and other credit services to ethnically diverse neighborhoods based on the race, color, or national origin of the residents of those neighborhoods, is one of the factors explaining America’s long-standing race gap in homeownership.
The federal government institutionalized redlining in the 1930s when a now-defunct federal agency, the Home Owners’ Loan Corp., created “residential security maps” in dozens of cities across the country to systematically deny mortgages in neighborhoods of color.
HOLC ceased to exist in 1951, and Congress later outlawed redlining with the Fair Housing Act of 1968, but lending discrimination in the housing market has persisted.
An article published in the journal SSM-Population Health in June 2021 found that “redlining has continued to influence racialized perceptions of neighborhood value and practices that have perpetuated racial inequities in lending.”
“Decades of racism in the housing market,” the article adds, “have prevented people of color, particularly Black Americans, equal access to capital, low-cost loans, and homeownership.”
The Department of Justice continues to enforce the Fair Housing Act to address ongoing allegations of modern-day redlining.
Current Black Homeownership Gap
As mentioned, the current race gap in homeownership rates between Black and white families is 29.6 percentage points as of Q4 2022. The vast majority of white families own residential property, while the majority of Black families do not, data shows.
Homeownership is often regarded as the American dream, but not everyone who wants to buy a house is able to get financing. The overall denial rate for home-purchase loans among all applicants in 2021 stood at 8.3%, according to the Consumer Financial Protection Bureau.
Bureau data shows that 15.3% of Black applicants had their mortgage loan requests denied in 2021, compared with 6.3% of non-Hispanic white applicants.
This first-time homebuyer guide recommends downloading your credit reports before submitting any applications for home loans. Creditworthy applicants who have home loan applications denied may be victims of discrimination. You can get free credit reports at AnnualCreditReport.com and can check your credit scores in several ways.
Homeownership by Race
The below table highlights homeownership data by race as of Q4 2022
| Race | Homeownership rate |
|---|---|
| Non-Hispanic white alone | 74.5% |
| Asian, Native Hawaiian, and Pacific Islander | 61.9% |
| Hispanic (of any race) | 48.5% |
| Black alone | 44.9% |
| Other (including mixed races) | 58.7% |
| All (nationwide population) | 65.9% |
Fixing the Black Homeownership Gap
The Urban Institute, a nonprofit research organization, has a five-point framework aimed at reducing the Black homeownership gap. Here are the five points:
1. Advance Local Policy Solutions
Local policy reforms, including the removal of any discriminatory terms in homeowner and condominium associations and possible property tax relief for low-income and moderate-income taxpayers, can help reduce the Black homeownership gap.
Expanding small-dollar mortgages could also make a difference.
2. Tackle Housing Supply Constraints and Affordability
Promoting affordable housing nationwide, including new investments in historically segregated and devalued neighborhoods, may help reduce the Black homeownership gap.
Public policy leaders could also review the viability of lease-to-own programs as a pathway to homeownership.
3. Promote an Equitable and Accessible Housing Finance System
Greater access to down payment assistance programs for economically disadvantaged consumers may reduce the Black homeownership gap.
This online mortgage calculator shows how home loan seekers can lower their monthly mortgage payments and total interest charges by making a larger down payment on a home.
Recommended: Do You Still Need to Put a 20% Down Payment On a House?
4. Accelerate Outreach for Mortgage-Ready Millennials
Reaching out to mortgage-ready millennials and improving tax credit incentives for renters to become homeowners may help reduce the Black homeownership gap.
Public-private partnerships can scale up additional programs aimed at bolstering homeownership among low-income people.
5. Focus on Sustainable Homeownership and Preservation
Funded programs that prevent foreclosures in the United States may particularly help Black homeowners maintain their wealth.
Providing homeowners of color with financial literacy may also help preserve homeownership among Black families.
The Takeaway
Racial housing disparities persist, despite federal laws designed to equal the playing field. The effects of redlining echo today, when 74.5% of white families own residential property and just 44.9% of Black families do. Solving this social inequity may require significant action and reform. See how employers can help first-time homebuyers.
If you’re looking for a mortgage lender, SoFi can help you achieve the American dream. Qualified first-time homebuyers can put as little as 3% down.
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